9 Key Considerations When Choosing a Business Banking Account

Choosing a business banking account is pivotal for any company, big and small. But it can also be overwhelming, whether you’re just starting out or simply looking to switch accounts. There are many things to consider, from fees and interest rates to account minimums and the products and services offered.

When Should You Open a Business Bank Account? 

If you're a business owner, you should have a business bank account. But before opening an account, you'll need a federal employee identification number (EIN). You can apply for your EIN online, by fax or by mail.

According to the U.S. Small Business Administration, your business exists as an entity separate from yourself once the IRS issues an EIN. If your business were a person, the EIN would be their Social Security number. Your EIN is necessary for tax and liability purposes. It's how the IRS identifies your business, and it's required when you file taxes, get a business credit card and more. 

Types of Business Bank Accounts

There are three types of business bank accounts common among businesses of all sizes:

• Checking account:

‍This is the most common type of account. It allows you to manage day-to-day transactions, write checks, manage payroll, use a debit card, and transfer/receive ACH payments.

• Savings account:

‍A savings account helps you save money to cover emergencies, save for large purchases or grow your business. The interest earned is typically higher than a checking account, but there may be restrictions on how often you can withdraw funds and minimum balance requirements.

• Cash management account (CMA): Typically web-based and offered by financial providers that aren’t banks, CMAs allow you to save, spend, and invest your money from one financial platform or portal.

Most businesses will benefit from having a checking account. But other accounts can help you manage different goals and needs. It can be beneficial to have more than one account since the Federal Deposit Insurance Corporation (FDIC) protects each account for up to $250,000. 

Choosing a Business Banking Account: 9 Things To Consider 

The best accounts offer features that save you time and money while providing flexibility and control over your finances. When choosing a business banking account, be sure to consider the following:

1. Features and services

Save time and streamline your business accounting process with features and services like mobile apps, bill pay, reports/analytics, and business credit card integration. Be sure to compare the features across banks and providers to find the best match for your business needs.

2. Fees 

It’s typical to incur fees for using a bank account, though some banks and providers offer fee-free options. Some fees you may encounter include: 

●        Monthly account fee

●        Transaction fees

●        ATM fees

●        International transaction fees

●        Wire transfer fees

●        Minimum balance fees

Choose an account with low or no monthly fees and few transaction fees. ATM access is also important if you need to make regular withdrawals. Some banks will reimburse you for ATM fees charged by other providers.

3. Balance requirements 

Some banks require you to keep a minimum balance, ranging from $100 to $10,000 or more. The bank may charge a monthly fee if you can't meet the requirements. This is particularly true for business savings accounts, so make sure you understand the minimum balance requirement and how much it will cost if you fall below the threshold.

4. Transaction limits

Transaction limits are the maximum number of transactions (withdrawals, deposits, transfers, etc.) you can make in a day or month without incurring a fee. If you need to make a lot of transactions, make sure your account doesn’t have restrictive transaction limits. The typical transaction limit for most banks is around 200 per month, but this could be lower or higher depending on the bank. 

5. Interest rates

 If you put your money in a high-yield savings account, the bank gives you interest for allowing them to use and invest your funds in other transactions. High-yield savings accounts typically offer higher interest rates than checking accounts. Keep in mind that some banks offer introductory rates for a set period, after which the rate will revert to the standard rate.

6. Access to funding

Most banks offer business funding products like a line of credit, loan, or merchant cash advance. These loans can help you manage cash flow, cover unexpected expenses, and seize opportunities or finance growth/expansion. Even if you don’t plan on borrowing money now, finding a bank that can offer you access to funding in the future is a good idea. 

7. Funds protection

If a bank is FDIC-insured, your money is protected if that bank fails. On average, seven banks fail each year, and this number can be much higher during a recession or financial crisis. Make sure the bank you do business with is FDIC-insured.

8. Ongoing support 

Banks provide varying levels of support, so assess your needs and choose a bank that can provide adequate assistance. Some banks offer dedicated customer support teams for small businesses, while others provide more general support. Access to 24/7 tools like chatbots, email, and phone support can also be helpful if (or when) you need assistance outside regular business hours.

9. Integrations 

Integrations with popular business banking platforms like QuickBooks and Xero can save time by automating bookkeeping and invoicing, allowing you to handle business finances in one place. If you use or plan to use any of these platforms, make sure the bank you choose offers integrations. Web-based finance platforms like Aion simplify integration by providing an all-on-one toolkit for banking and accessing capital.

What Are the Benefits of Choosing a Business Banking Account? 

Keeps your business and personal finances separate

Keeping your personal and business finances separate is essential for legal and tax purposes. 

Builds business credit

Having a business bank account in good standing can help you build credit. This can be helpful if you need to take out a loan or get lines of credit in the future.

Offers protection for your deposits

Opening an account with an FDIC-insured bank ensures your money is safe if the bank fails.

Makes it easier to manage cash flow

A business bank account lets you easily handle cash flow with features such as online bill pay and remote deposit. 

Simplifies tax time

A business bank account can simplify tax time by providing easy access to receipts and bank statements.

Business Banking FAQ

Is opening a business bank account online safe?

Yes. When choosing a bank, make sure it’s FDIC-insured and offers features that meet your business’s specific needs.

Should I choose a small or large bank?

The size of the bank isn’t as important as choosing a bank that’s right for you. Smaller banks may be more responsive to your needs and offer more personalized service, while large banks may have more resources and offer a broader range of products and services.

Can I use a personal account for my business? 

Technically, yes. But you shouldn’t. You need to keep your business and personal finances separate for liability and tax reasons. If you plan on borrowing money, you’ll also need to build a separate credit history for your business.

Simplify Your Business Banking With Aion

Choosing a business banking account that works for your specific needs is important.

Consider how well your bank integrates with other finance tools, if it’s as mobile as you are, and how easy it is to borrow money. If you need flexibility and scalability, consider an all-in-one platform like Aion.

With Aion, you’ll get access to integrated QuickBooks Online, robust finance tools, and 24/7 customer support. Sign up for free today for Aion’s all-in-one business finance platform.

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